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The U.S. financial system appears to be crumbling. Politicians and Washington bureaucrats are scrambling to make it appear like they are actually doing something. When politicians and Washington bureaucrats scramble, that means that taxpayers will be getting screwed again. They are throwing our money at mismanaged corporations and providing handouts to people who thought they were going to get rich buying and selling houses. The people who are getting screwed are the citizens who have lived within their means, those who did not take unreasonable risks and senior citizens who are now stuck with 1.5% interest rates on their savings while inflation exceeds 8%. One of the largest mortgage lenders in the country, IndyMac, has been taken over by the FDIC. Some 10,000 people will lose $500 million that is not covered by insurance. The FDIC estimates that this takeover will cost the American people between $4 billion and $8 billion. If that is their estimate, you can be sure the cost will exceed $20 billion.

Phil Gramm, one of John McCain’s chief economic advisors and a chief architect of deregulating the banking industry while a US Senator, has called us a nation of whiners. This is a man who is currently the vice chairman of UBS bank, making in excess of $500,000 per year in compensation. I wouldn’t be whining if I made more money than 99.9% of all Americans either. He has certainly earned that pay. His employer has written off $37 billion of mortgage debt so far. Stockholders are probably thrilled with his performance, as the stock has collapsed from $62 to $19 in the last year. Sounds like he is Treasury Secretary material in a McCain administration.

Of course, there are Democrats who are at least as financially illiterate as Mr. Gramm. Senator Chris Dodd from Connecticut showed his financial acumen when questioned about Fannie Mae and Freddie Mac. "They have more than adequate capital, in fact more than the law requires. They have access to capital markets. They're in good shape. To suggest somehow they're in major trouble is not accurate." Later that day, Hank (Mr. Bailout) Paulson committed our tax dollars to save these horribly run institutions. Fannie Mae has lost $7.7 billion in the last 9 months. Freddie Mac has lost $5.2 billion in the last 9 months. They are leveraged 60 to 1. As the current housing crisis continues to expand, these two companies will have to write off billions more in loans and are effectively insolvent. Mr. Dodd is lying to the American people because he doesn’t think we can handle the truth. The taxpayer will again be responsible for bailing out two of the worst run organizations on the planet. This bill will be a whopper. Jim Rogers, famed investor, said, "They’re ruining what has been one of the greatest economies in the world. Bernanke and Paulson are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this."

Congress is about to pass a bill (attempt to bribe potential voters) that will throw billions of our tax dollars at banks, homebuilders, and reckless homeowners. President Bush has threatened a veto, but will surely buckle and sign the bill. This bill will shift greater responsibility to Fannie Mae and Freddie Mac. That is very comforting. Ron Paul in mid-May described the situation in his usual straightforward fashion:

"Lending standards were relaxed, or even abandoned altogether, creating an exaggerated pool of homebuyers that led to ballooning home prices that many, especially real estate investors, expected to continue forever. Now that the bubble has burst, the losses are staggering."

"However, many in Washington fail to realize it was government intervention that brought on the current economic malaise in the first place. The Federal Reserve’s artificially low interest rates created the loose, easy credit that ignited a voracious appetite in the banks for borrowers. People made these lending and buying decisions based on market conditions that were wildly manipulated by government. But part of sound financial management should be recognizing untenable or falsified economic conditions and adjusting risk accordingly. Many banks failed to do that and are now looking to taxpayers to pick up the pieces. This is wrong-headed and unfair, but Congress is attempting to do it anyway. These housing bills address the crisis in exactly the wrong way, by seeking to hide the problem with more disastrous government bail-outs and interventions."http://www.lewrockwell.com/orig9/quinn3.html

How many people know anything about the Home Ownership and Equity Protection Act? If you don't you should. It's the root of the subprime mortgage crisis.

How many people know anything about the Home Ownership and Equity Protection Act? If you don't you should. It's the root of the subprime mortgage crisis.

How so ?....

The 21st century. The age of Smart phones and Stupid people.

It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.

Banks were not making loans in areas that were bad risks - Congress stepped in and claimed that it was racially motivated - and passed laws requiring Banks to make these sub-prime loans.

the Home Ownership and Equity Protection Act dealt with primarily disclosures on refi's and home improvements. You may be thinking of The Community Reinvestment Act .

The 21st century. The age of Smart phones and Stupid people.

It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.

the Home Ownership and Equity Protection Act dealt with primarily disclosures on refi's and home improvements. You may be thinking of The Community Reinvestment Act .

That's correct. HOEPA was primarily directed at "extending liability for classes of subprime loans to secondary mortage market participants." It sounds like a CystBoy meme that the evil Democratic Congress forced lenders to extend subprimes due to racial quotas.

Banks were not making loans in areas that were bad risks - Congress stepped in and claimed that it was racially motivated - and passed laws requiring Banks to make these sub-prime loans.

Banks use financial ratios for a reason and to say they are racially motivated is outrageous. These stupid laws end up screwing the hard working tax payers at the end and when the sh*t really gets bad, dems want a bailout. Of course the dems want to blame all this on Bush.

That's correct. HOEPA was primarily directed at "extending liability for classes of subprime loans to secondary mortage market participants." It sounds like a CystBoy meme that the evil Democratic Congress forced lenders to extend subprimes due to racial quotas.

That doesn't make sense. The Liability or risk has always been extended or bought by the secondary market. Very few Mortgage originators hold on to the mortgages they originated. They make their money from the fees they impose upon origination, selling those instruments to the secondary market & continued servicing of some of those mortgages.

I think you are confusing origination & servicing with securitization.

The 21st century. The age of Smart phones and Stupid people.

It is said that branches draw their life from the vine. Each is separate yet all are one as they share one life giving stem . The Bible tells us we are called to a similar union in life, our lives with the life of God. We are incorporated into him; made sharers in his life. Apart from this union we can do nothing.